Correlation Between Apollo Global and Discover Financial
Can any of the company-specific risk be diversified away by investing in both Apollo Global and Discover Financial at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Apollo Global and Discover Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Apollo Global Management and Discover Financial Services, you can compare the effects of market volatilities on Apollo Global and Discover Financial and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Apollo Global with a short position of Discover Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Apollo Global and Discover Financial.
Diversification Opportunities for Apollo Global and Discover Financial
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Apollo and Discover is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Apollo Global Management and Discover Financial Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Discover Financial and Apollo Global is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Apollo Global Management are associated (or correlated) with Discover Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Discover Financial has no effect on the direction of Apollo Global i.e., Apollo Global and Discover Financial go up and down completely randomly.
Pair Corralation between Apollo Global and Discover Financial
Considering the 90-day investment horizon Apollo Global is expected to generate 5.17 times less return on investment than Discover Financial. But when comparing it to its historical volatility, Apollo Global Management is 1.01 times less risky than Discover Financial. It trades about 0.08 of its potential returns per unit of risk. Discover Financial Services is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest 17,323 in Discover Financial Services on November 1, 2024 and sell it today you would earn a total of 2,780 from holding Discover Financial Services or generate 16.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Apollo Global Management vs. Discover Financial Services
Performance |
| Timeline |
| Apollo Global Management |
| Discover Financial |
Apollo Global and Discover Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Apollo Global and Discover Financial
The main advantage of trading using opposite Apollo Global and Discover Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Apollo Global position performs unexpectedly, Discover Financial can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Discover Financial will offset losses from the drop in Discover Financial's long position.| Apollo Global vs. Blue Owl Capital | Apollo Global vs. TPG Inc | Apollo Global vs. Patria Investments | Apollo Global vs. Cion Investment Corp |
| Discover Financial vs. Ally Financial | Discover Financial vs. Synchrony Financial | Discover Financial vs. Western Union Co | Discover Financial vs. Bread Financial Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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